What is escrow; definition and benefits in the online world

You’ve probably heard this term thrown around here and there. You may even know what it means. But as more and more people are turning to remote work, it is good to inform those who have just jumped on board.

What is escrow payment and how does it work?

Don’t worry, it’s nothing complicated. Escrow refers to a way of handling financial transactions. When there is a transaction that needs to happen between a buyer and a seller, a third party/agent will hold the agreed amount and keep it until the obligation has been fulfilled. This protects all parties involved from any malicious intent and/or practice.

There are certain industries where escrow payments are essentially mandatory. For example, when it comes to purchasing something big like homes and other real estate, the involvement of an escrow agent is almost inevitable. They’re also common in the context of the stock market.

Of course, nothing good comes easy (or free), so the third party (agent or a company) will usually require a fee for their services. Additionally, you want to make sure that the escrow agent or company is someone you can trust, otherwise, you’re just creating the same problem you were trying to solve with escrow.

Online escrow payment

Unsurprisingly, many online transactions have in recent years involved escrow. This is because the nature of online transactions is more anonymous, remote, and oftentimes risky in comparison with deals made by people “in real life.”

For example, shipped packages may contain faulty products. By the time the customer figures this out, the seller might seem to have dropped off the face of the Earth, especially when doing business on less reputable sites. In terms of services, freelancers are exposed to the risk of being ghosted - i.e. ignored by the client once the task has been completed.

Let’s also not forget the reality of how complicated B2B transactions can be. When two individuals are involved, there is only so much abuse or swindling that can happen. With businesses, however, the damage can be huge, not to mention how difficult it can be to take legal action against other businesses.

Unless you only want to limit yourself to doing business with respected online marketplaces such as Amazon or eBay or only making small transactions, escrow quickly becomes a necessity when it comes to doing business in the online world.

How can you benefit from escrow as a freelancer?

Escrow payments protect freelancers and companies from malpractice and fraud. Cryptotask.org is the first freelancing platform where a third party holding the agreed amount is blockchain - a database technology that makes fraudulent activities impossible. When it comes to the fee, it’s only 3% for each side - in oppose to 20% on many other platforms.

It’s a great way to soothe any anxieties you might have about remote tasks where you get to do business with strangers online. With an escrow, you are protected from being ghosted ever again.

How can you benefit from escrow as a recruiter?

As freelancers are recognizing the benefits of escrow, more of them are choosing to apply only to escrow-protected tasks. If you are posting a job you will be offered to use escrow  - choosing so will ensure more freelancers apply for it. 

Which cryptocurrencies are supported?

Using escrow you get a choice to pay or get paid in Bitcoin, Tezos, ETH stables (USDT, USDC, DAI), BSC stables (USDT, USDC, DAI) or another crypto – loans are available from our partner SmartCredit. 

Conclusion

Escrow payment is a legal practice that involves giving the funds involved in a financial transaction to a third party to hold onto until the time has come for the final payment. It protects everyone involved from fraud and malpractice. 

That can be especially useful in the online world, either online purchases or remote work. Whether you’re an employer or a potential employee, you’ll be glad to know that our transactions are escrow-secured! Read more about the main reasons to use escrow while doing business on Cryptotask.org in our previous article on Medium.